Food Forum: Too Big to Fail?

It is time for grocers to ask themselves what business they are really in. By Keith Cooperman Right now, they are out there, hunting you. Venture-backed, Silicon Valley startups. A group of college students in a dorm room. A loner hunkered in front of a laptop. All working on their big idea. Their Facebook, their Uber. The idea that will disrupt the old order and make them rich. It is the American dream in the Internet age. The iPhone that makes Blackberry a joke. Uber destroying taxi cab cartels. Netflix takes down Blockbuster and takes on the Networks. The Social Network in theaters and Shark Tank on TV. Think the grocery industry is immune? I have got 638 billion reasons a year why it is not. That is the total sales of the U.S. grocery industry in 2014—and another number, 1.5 percent, net industry profit after taxes. Do not think that there are not smart players in the Valley that see that big pie and think, “We can do better than 1.5 percent.” Better yet, put yourself in the shoes of an average consumer. You come home after the end of a long day, look into your refrigerator and see plenty of groceries, but have no idea what to make for dinner, and order a pizza instead. Or another common consumer problem—you go to the supermarket and buy $100 in groceries. By the time you get home, you realize you forgot to pick up olive oil and toothpaste. But you say, “That’s always been a problem. Nobody can fix that.” To quote Yoda, “That is why you fail.” Right now there is an entire generation of hackers, coders, entrepreneurs and venture capitalists that are counting on the fact that most companies will not even try to solve problems like these. They believe all they need is to find a consumer pain point, develop a solution for it and they can change the world. Just in the past couple of years, we have witnessed the birth of tech-driven grocery and meal delivery services that take direct aim at the established order. Amazon Fresh, Instacart, Plated, Hello Fresh and Blue Apron, just to name a few. Their revenues are small, but they are growing—and learning. They are driven to succeed or die trying. In the end, it comes down to a simple question. What business are you really in? Kodak developed the first digital camera, but buried it because they were worried about cannibalizing their highly profitable film business. How did that work out for them? Kodak’s real business, and the value of their brand, was making memories. They could have dominated the digital camera market if they had just realized they had invented a far more efficient way for consumers to capture their memories, but instead, Kodak ended up on the ash heap of corporate history. Take a real good look at your business. Does a grocery store have to have a large, physical storefront to sell groceries? When you see shoppers on their phones while they are walking through the aisles, are they using your store’s app? How much value does your company provide to customers after they walk out the door? Can you help customers who are asking themselves, “what’s for dinner?” Are you willing to challenge the most fundamental assumptions about your company’s business model and question the value you provide to your customers? Or are you too big to fail? Keith Cooperman is CEO and co-founder of Supercook.com. He can be reached at [email protected].